Elliott Wave chart analysis for the S&P 500 for 29th April, 2011. Please click on the charts below to enlarge.
As expected for Friday the S&P continued to rise.
We still have two hourly wave counts. The first expects the trend to remain the same and for momentum to increase. The second sees a fourth wave at pink (minute) degree developing to start Monday next week.
The upcoming fourth wave correction at pink degree may not move into wave 1 pink price territory below 1,339.46.
At 1,553.42 wave 5 blue will be extended and will reach equality with wave 3 blue. Within an impulse, two of the three actionary waves may be extended and here the first wave at blue degree is not, so both 3 and 5 may be.
At 1,564.02 wave C black will reach equality with wave A black. This is a common relationship between waves A and C of a zigzag and so this is a highly likely place for upwards movement to end.
Main Hourly Wave Count.
If this main wave count is correct then momentum should increase as the middle of this third wave develops.
At 1,374.26 wave 3 green will reach equality with wave 1 green. At 1,400.70 wave 3 green will reach 1.618 the length of wave 1 green.
Movement above 1,364.56 would add confidence to this wave count as that is where the alternate would be invalidated.
Movement below 1,361.44 would invalidate this wave count as any second wave correction within wave 3 purple may not move beyond the start of its first.
Alternate Hourly Wave Count.
The target for this last wave to end was 1,371.42. Although we did see new highs this target was not reached.
Ratios within wave 3 pink are: wave 3 green is 0.69 points longer than 0.618 the length of wave 1 green and wave 5 green is 0.45 points short of 0.382 the length of wave 3 green.
With these excellent fibonacci ratios and continuing divergence as price trends higher with MACD trending lower, this wave count must be seriously considered.
Movement below 1,361.44 would provide confidence in this wave count as that is where the main wave count would be invalidated.
Wave 2 pink was a simple zigzag. Wave 4 pink is more likely to be either a flat, triangle or a combination. At this early stage the most likely place for it to end would be about the fourth wave of one lesser degree which is at 1,354.65.
Wave 4 pink may not move into wave 1 pink price territory. This wave count is invalidated with movement below 1,339.46.
Lara,
Just wondering whether you have considered the possibility that we are still finishing up Minor 3, rather than Minor 5, of C. I have seen a few others count it this way. Do you think that is a possible count?
It just seems like Minor 3 has an unsatisfying look to it.
Peter
Hi Peter, Yes indeed I have considered that, and I agree that wave 3 blue has a somewhat unsatisfactory look to it.
I could chart this and keep it as an alternate, but in trying to keep things as simple as possible I have chosen not to. My main reason is it still requires further upwards movement and the target at 1,564.02 where C black reaches equality with A black would be highly likely. Short to mid term it does not diverge at all from the wave count we are using now.
If and when such an alternate would diverge in the expectation of the next direction, then I shall chart it and present it to members as an alternate.
Lara,
Understood. I was thinking of initiating a short position upon the completion of what you are currently counting as Minor 5. If the subsequent move down does not look impulsive, then I might cover the short and wait for possible new highs.
Peter